Executive Briefings

Look to See 'Japan Inc.' Move Even More Production Offshore

To see the future of Japanese business, says a board member of one of the country's biggest firms, look at the toy industry. Decades ago Japanese companies produced heaps of cheap, plastic playthings. As China took over that market, Japan moved on to Nintendos. The idea is that Japan Inc. can shift its low-end production abroad while pursuing sophisticated manufacturing at home.

Japanese firms do 30 percent of their manufacturing overseas-twice as much as in the early 1990s. Toshiba's foreign-made share has grown from 52 percent to 56 percent in the past year alone. Fuji Xerox and Yamaha Motor boast levels of 80 percent and 94 percent, respectively. As the yen hits 15-year highs on a nominal basis, there is more pressure to ship operations abroad. "We want to keep domestic production," sighed Satoshi Ozawa, Toyota's chief financial officer, this month. "But we are quickly losing competitiveness." The carmaker already produces 58 percent of its vehicles abroad.

However, there are longer-term factors, besides the yen's recent strength, pushing firms abroad.

Read Full Article

To see the future of Japanese business, says a board member of one of the country's biggest firms, look at the toy industry. Decades ago Japanese companies produced heaps of cheap, plastic playthings. As China took over that market, Japan moved on to Nintendos. The idea is that Japan Inc. can shift its low-end production abroad while pursuing sophisticated manufacturing at home.

Japanese firms do 30 percent of their manufacturing overseas-twice as much as in the early 1990s. Toshiba's foreign-made share has grown from 52 percent to 56 percent in the past year alone. Fuji Xerox and Yamaha Motor boast levels of 80 percent and 94 percent, respectively. As the yen hits 15-year highs on a nominal basis, there is more pressure to ship operations abroad. "We want to keep domestic production," sighed Satoshi Ozawa, Toyota's chief financial officer, this month. "But we are quickly losing competitiveness." The carmaker already produces 58 percent of its vehicles abroad.

However, there are longer-term factors, besides the yen's recent strength, pushing firms abroad.

Read Full Article